Glossary

NZ money terms, in plain English.

No jargon, no judgement — just clear explanations of how money actually works in New Zealand, from Safe to Spend to PIE tax.

50/30/20 Rule

A budgeting shorthand: roughly 50% of take-home pay to needs, 30% to wants, 20% to savings and debt repayment.

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Automatic Payment (AP)

A recurring payment you set up and control — same amount, same schedule, initiated by you, not the biller.

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Buy Now, Pay Later (BNPL)

Instalment services like Afterpay, Laybuy and Zip that split a purchase into interest-free payments — committed spending that quietly stacks up.

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Cash Flow

The timing of money moving in and out — you can be “fine on paper” and still short on Thursday if the timing is wrong.

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Compound Interest

Interest earned on interest — the force that grows savings quietly and inflates unpaid debt just as quietly.

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Credit Score

A number summarising your borrowing history that lenders use to price risk — in NZ, built by Centrix, Equifax and illion.

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Credit Utilisation

How much of your available credit you are actually using — a major input into your credit score, best kept under about 30%.

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CSV Statement Import

Downloading your transactions from internet banking as a file and loading it into a budgeting app — full data, no bank login shared.

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Debt Avalanche

Paying minimums on everything, then throwing every spare dollar at the highest-interest debt first — the mathematically cheapest path out.

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Debt Snowball

Paying off the smallest debt first for the quick win, then rolling its payment into the next — momentum over maths.

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Direct Debit

An authority you give a company to pull money from your account — flexible amounts, initiated by them.

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Discretionary Spending

The spending you choose — eating out, streaming, hobbies — as opposed to the bills you must pay either way.

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Disposable Income

What remains of your pay after tax — often confused with what is actually free to spend, which is a smaller number.

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Emergency Fund

Money set aside for genuine surprises — job loss, car repairs, urgent travel — so a bad week doesn’t become debt.

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Envelope Budgeting

Dividing money into labelled pots — once an envelope is empty, that category’s spending stops until next pay.

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Fixed Expenses

Costs that arrive on schedule at a known amount — rent, insurance, subscriptions — the skeleton of any budget.

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IRD Number

Your personal tax identifier in New Zealand — needed for work, bank accounts, KiwiSaver and property transactions.

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KiwiSaver

New Zealand’s voluntary workplace savings scheme for retirement and first homes — your contributions plus employer and government top-ups, invested in a fund you choose.

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KiwiSaver First-Home Withdrawal

The rule that lets eligible first-home buyers withdraw almost all of their KiwiSaver balance to put toward a deposit.

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Minimum Payment

The smallest amount your card issuer will accept each month — designed to keep the debt alive, not to clear it.

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Net Worth

Everything you own minus everything you owe — the single number that tracks whether your whole position is improving.

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OCR (Official Cash Rate)

The Reserve Bank’s benchmark interest rate — the dial that moves mortgage rates, savings rates and the whole cost of money in NZ.

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Open Banking

The regulated system that lets you instruct your bank to share your data with services you choose — live in NZ since 1 December 2025.

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Pay Yourself First

Moving savings out on payday before any spending happens — treating your future as the first bill, not the leftover.

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PAYE (Pay As You Earn)

The tax your employer deducts from wages before you are paid — income tax plus the ACC earner’s levy, sent to IRD on your behalf.

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PIE Tax (PIR)

The tax regime for KiwiSaver and managed funds — capped at 28%, often lighter than your income tax rate.

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RWT (Resident Withholding Tax)

Tax deducted from your interest earnings before they reach you — set by the rate you choose with your bank.

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Safe to Spend

Your bank balance with every upcoming bill, BNPL instalment, allocated budget and savings contribution already subtracted — what is genuinely yours until next payday.

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Sinking Fund

Saving a little each pay toward a known future expense — rego, Christmas, insurance — so it never arrives as a surprise.

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Student Loan Repayment

The 12% deduction on NZ income above the repayment threshold — interest-free while you stay in New Zealand.

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Subscription Creep

The slow accumulation of small recurring charges — each trivial alone, quietly totalling serious money per year.

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Term Deposit

Locking savings with a bank for a fixed period at a fixed interest rate — certainty in exchange for access.

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Variable Expenses

Necessary costs whose size moves around — groceries, petrol, power — the part of the budget that needs a buffer, not a guess.

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Working for Families

IRD-administered tax credits that top up the income of eligible NZ families with dependent children.

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Zero-Based Budgeting

A budgeting method where every dollar of income is assigned a job — spending, saving or debt — until nothing is left unallocated.

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Understanding is step one. Seeing is step two.

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